Prepare journal entry to record

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On January 1, 2020, LPT Company issued 2,000 convertible bonds. The bonds have a three-year term and are issued at 110 with a face value of P1,000 per bonds, giving total proceeds of P2,200,000. Interest is payable annually in arrears at a nominal rate interest rate of 6%. Each bond is convertible at any time up to maturity into 25 shares of capital with par value of P20. The bonds are converted on Dec. 31, 2015. When the bonds are issued, the prevailing market rate for similar bonds without conversion privilege is 9%. The PV of 1 at 9% for three periods is .77 and the PV of an ordinary annuity of 1 at 9% for the three periods is 2.53.

Required: Prepare journal entry to record the

a. issuance of the bonds on January 1, 2020,

b. interest payment,

c. effective amortization and

d. bond conversion on December 31, 2020.

Reference no: EM133234166

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